Liquidity Management

Cash management, Dodd-Frank, Liquidity Management, Money Market Funds, Regulatory

cash management, FDIC, IOER, TAG

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The US Senate last Thursday rejected a possible two year extension of the Transaction Account Guarantee (TAG) program, which both provided insurance to $1.6 trillion in cash holdings (16% of…

The saga continues: what should Level 1 assets be in Basel III

October 24, 2012

Basel III, Liquidity Management, Regulatory

Basel III, European Covered Bond Association, High-Quality Liquid Assets, LCR, Tier 1

Ah, the definition of Basel III Level 1 assets continues to befuddle, complex and give rise to all sorts of shenanigans. In today’s edition of the ongoing soap opera, Reuters…

The FDIC’s Transaction Account Guarantee (TAG) is scheduled to expire at the end of the year. Where will the money go?

October 3, 2012

Liquidity Management, Money Market Funds, Repo

FDIC, Federal Reserve, Finadium, Lehman, Repo, TAG, Transactional Account Guarantee

The FDIC’s Transaction Account Guarantee (TAG) is scheduled to expire at the end of the year. Will it go out with a bang or a whimper? Continue reading

London Stock Exchange to lose spreads on CCP interest

October 2, 2012

CCP, Europe, Liquidity Management

CCPs, ESMA, LCH.Clearnet, London Stock Exchange, LSE

On Thursday Sept 27 2012, ESMA published its technical standards on the Regulation on OTC derivatives, central counterparties and trade repositories (EMIR). Among other things, this document spells out specifics…

Bank of England lays out resolution plans for failed banks

September 20, 2012

Bank of England, Liquidity Management, Regulatory

bail-in, Orderly Liquidation Authority, Resolution

Andrew Gracie of the Special Resolution Unit of the Bank of England presented on Monday at the British Bankers Association. His speech, “A practical process for implementing a bail-in resolution…

Liberty Street Economics Blog on bilateral and tri-party repo haircut differences: they can't explain it. We can.

September 18, 2012

Liquidity Management, Regulatory, Repo, Repo Futures, Systemic Risk, Tri-Party Repo, Uncategorized

Federal Reserve, Liberty Street Economics, Regulatory, Repo, tri-party repo

On the FRBNY Liberty Street Economics blog there was post on Monday, September 17, 2012 entitled “The Odd Behavior of Repo Haircuts during the Financial Crisis” that caught our eye.…

Thursday’s News: Fed and ECB actions impacting the securities finance markets

September 6, 2012

Europe, Liquidity Management, Money Market Funds, Repo, Securities Lending

bond buying, ECB, European Central Bank, Federal Reserve, QE3

This Thursday brings the announcement that European Central Bank President Mario Draghi has confirmed that the ECB will purchase an unlimited number of bonds to support Spain, Italy and other…

An idea about solving the LCR eligible asset problem

August 29, 2012

Basel III, Collateral Management, Liquidity Management, LTRO, Regulatory

Basel III, collateral management, Disconut Window, Discount W, ECB, Federal Reserve, Finadium, LCR, Liquidity Coverage Ratio

An article published by Bloomberg on August 28, 2012, written by Jim Brunsden, “ECB Said To Urge Weaker Basel Liquidity Rule On Crisis Risks“ looks at efforts to water down…

Fed's LSE blog chimes in on why not to lower Interest on Excess Reserves rate; we think they miss the point

August 28, 2012

Basel III, Liquidity Management, Regulatory, Shadow Banking

ECB, Federal Reserve, Finadium, Liberty Street Economics, Liquidity Coverage Ratio, maturity transformation, Shadow Banking

On Monday, August 27th the FRBNY Liberty Street Economics blog posted a story entitled “Interest on Excess Reserves and Cash “Parked” at the Fed”. Written by Gaetano Antinolfi and Todd…

Investors renewing interest in enhanced cash strategies; look out for a market bubble

August 20, 2012

Liquidity Management, Money Market Funds

enhanced cash, Institutional Investors, money market funds

In what seems like deja vu, Pensions and Investments reported last week that institutional investors have stepped up their use of enhanced cash strategies, the same strategies that caused all…

The future of the Fed Funds market looks pretty grim

August 16, 2012

Basel III, Liquidity Management

Fed Funds

When the European Central Bank reduced the rate they pay on cash held in their deposit facility to zero, there was an expectation that the Fed would do the same.…

Singh and Stella on the velocity of collateral: banks just don't trust each other. We think there is more to it.

A July 2, 2012 post by IMF Economist Manmohan Singh and consultant Peter Stella in the blog Vox revisits a familiar topic: the velocity of collateral. We’ve written about this…

The demise of LIBOR: the pricing scandal is only part of the problem

June 28, 2012

Derivatives, Europe, Liquidity Management, Repo

Barclays, CFTC, EURIBOR, FSA, LIBOR, OIS, US Department of Justice

The simmering LIBOR/EURIBOR manipulation scandal made front page headlines yesterday when Barclays was fined by the UK’s FSA (£59.5 mm) and the US Department of Justice ($160 mm) & CFTC…

Does it make sense to loosen the requirements of the Liquidity Coverage Ratio?

June 19, 2012

Basel III, Collateral Management, Liquidity Management, Regulatory

Basel III, Federal Reserve, LCR, Level 1 assets, Level 2 assets, Liquidity Coverage Ratio, Tarullo

The Wall Street Journal reported on Friday that global regulators were again talking about loosening up the rules that govern the Liquidity Coverage Ratio. This is the next round of…

Shadow Banking not that Shadowy, says Cantor

June 4, 2012

Collateral Management, Liquidity Management, Repo, Tri-Party Repo

Cantor Fitzgerald, collateral, collateral management, Liquidity, Liquidity Management, Repo, Repo Conduits, Shadow Banking

An article in the June 1, 2012 Business Week by Jody Shenn and Lisa Abramowicz, “Cantor Plans to Enter Shrinking Shadow Banking”, took us by surprise. Cantor Fitzgerald is starting…

Artfully Dodging the Liquidity Coverage Ratio in Securities Lending and Repo.

May 29, 2012

Collateral Management, Liquidity Management, Regulatory, Repo, Securities Lending

Bank of England, Basel III, collateral management, ETFs, Federal Reserve, Finadium, LCR, Liquidity Coverage Ratio, Regulations, Repo, Securities Lending, Shadow Banking

Banks everywhere are focusing on the Liquidity Coverage Ratio (LCR) provisions in Basel III. The provisions don’t kick in until 2015, but the observation period is in full swing and…

Bank of New York Mellon targets DTC-cleared paper in the next step in tri-party reform. This one is going to hurt.

May 17, 2012

Collateral Management, Liquidity Management, Regulatory, Repo, Systemic Risk, Technology, Tri-Party Repo

Bank of New York Mellon, Basel III, collateral management, JP Morgan Chase, Liquidity, Repo, tri-party repo

Bank of New York Mellon (BNYM) has told their tri-party customers about the next step in reducing the systemic risk….and some market players fear it will create some nasty unintended…

The rise and fall of "Safe Assets"

May 16, 2012

Basel III, CCP, Collateral Management, Liquidity Management

CCP, collateral management, Liquidity Coverage Ratio, Nomura, safe assets

From Nomura, by way of businessinsider.com comes a nice graphic showing the growth and falloff in “safe assets”. We have written before about the double squeeze in the market for…

Moody's Downgrade Watch: What Will the Buy-Side Do?

May 10, 2012

Collateral Management, Derivatives, Liquidity Management, Repo

2a-7 funds, Downgrade, Moody's, Regulations, Repo, sec, Wholesale Funding

The likelihood that Moody’s will downgrade bank debt in the coming weeks and months is bad news for the banks themselves. But we would like to look at the other…

The coming Moody's bank downgrades: funding and collateral will feel the heat

May 9, 2012

Collateral Management, Derivatives, Liquidity Management, Repo, Systemic Risk, Wrong Way Risk

Bank of America, Citibank, collateral management, Federal Reserve, Finadium, Moody's, Morgan Stanley, OTC derivatives, Repo, Wholesale Funding

Moody’s is reviewing 17 global banks for downgrades that may come as early as June. The news is starting to fill with stories on how much extra collateral banks will…

Getting to the meat and potatoes of Shadow Banking regulation

April 30, 2012

Liquidity Management, Regulatory, Repo, Securities Lending

Bank of England, Paul Tucker, Shadow Banking

Speaking last Friday at a European Union conference on Shadow Banking, Bank of England Deputy Governor Paul Tucker began to put some flesh around the bare skeleton of what Shadow…

A look at the Volcker Rule's impact on market liquidity

April 5, 2012

Liquidity Management, Regulatory, Repo, Systemic Risk

Dodd-Frank, Liquidity, Liquidity Management, Repo, Shadow Banking, Volcker Rule

A new opinion piece from Woodbine Associates published on April 4, 2012 “Beyond Volcker: Seeing the Forest through the Trees” caught our eye. About half-way into the piece the author…

Cleaning up repo-to-maturity accounting (and adding liquidity risk reporting too)

March 29, 2012

Collateral Management, Liquidity Management, Regulatory, Repo

FASB, Repo, repo to maturity

In US Congressional testimony yesterday, Susan Cosper, Technical Director of the Financial Accounting Standards Board, discussed the FASB’s intention to change repo-to-maturity accounting procedures in order to avoid future loopholes.…

Gaming the LCR

March 28, 2012

Basel III, Liquidity Management, Regulatory

Basel III, LCR, Liquidity Coverage Ratio

As banks begin to publish their Liquidity Coverage Ratios, there appears to be an opportunity to both game the system and for legitimate figures to be distorted by market analysts,…

Is collateral optimization the next big thing?

March 21, 2012

Collateral Management, Liquidity Management

collateral management, collateral optimization

It is safe to say that professionals working in securities finance, liquidity and related fields know that collateral management is a major priority for 2012, and a large portion of…

Bloomberg: Basel Group to Consider Fine Tuning of Draft Bank Liquidity-Rule Changes

March 12, 2012

Basel III, Collateral Management, Liquidity Management, Regulatory

Basel III, LCR, Liquidity Coverage Ratio

A global banking regulator has said that the Basel Committee for Banking Supervision is planning to consider these same changes at its meeting on March 20-21. Finadium has released a…

Finadium: corporate bonds and equities gaining as high quality assets

March 11, 2012

Basel III, Collateral Management, Liquidity Management, Regulatory, Repo, Securities Lending

Basel III, High-Quality Liquid Assets, HQLA, LCR

A new report from Finadium released today looks at the growth of corporate bonds and equities as high quality assets for bank balance sheets and as collateral. The possibility has…

Reuters: ECB LTRO ready to close up shop

February 22, 2012

Collateral Management, Liquidity Management, LTRO, Regulatory

ECB, Liquidity, LRTO

With already half a trillion Euros out the door and another half a trillion expected to go, The European Central Bank is ready to close up shop on its LTRO…

What is really driving the banks demand for LTRO cash from the ECB?

February 14, 2012

Liquidity Management, LTRO, Repo

ECB, Europe, Initial Margin, LCH.Clearnet, Liquidity, Liquidity Management, MF Global, Nomura, Repo

The LTRO continues to attract attention. With another tranche coming up on February 29th, pundits relish in writing about how much money the banks will make by buying sovereign debt…

Sure enough, seclending and repo are central to financial markets

February 9, 2012

Liquidity Management, Regulatory, Repo, Securities Lending

AFME, Europe, Liquidity Management, Regulatory, Repo, Securities Lending

Securities Lending Times had a great comment out this morning: securities lending and repo came up the Association for Financial Markets in Europe (AFME) liquidity conference yesterday. A group of…

Some musings about the IMN Beneficial Owners Securities Lending Conference

February 3, 2012

Beneficial Owners, CCP, collateral management, collateral transformation, Collateral upgrade, Dexia, Finadium, General collateral lending, IMN International Beneficial Owners' Securities Lending Summit, Intrinsic value lending, Liquidity Coverage Ratio, Securities Lending

CCP, Collateral Management, Liquidity Management, Securities Lending

There were lots of interesting comments made on various panels at the conference. Here are some that resonated. Not being able to write as fast as panelists can speak, much…

EU may allow European asset-backed securities to be included as liquid assets for the liquidity coverage ratio. France & Germany push for delay to 2018, much to the chagrin of the UK.

January 23, 2012

Collateral Management, Liquidity Management, Repo

Basel III, collateral management, Europe, Finadium, LCR, Liquidity Coverage Ratio

An article in Bloomberg on January 20, 2012 by Esteban Duarte caught our eye. The reporter wrote that the EU may allow European asset-backed securities (ABS) to be included as…

Euromoney interview with IMF Economist Manmohan Singh on repo, re-hypothecation, collateral chains, and more

January 19, 2012

Liquidity Management, Re-Hypothecation, Regulatory, Repo, Securities Lending

Basel III, Finadium, LCR, Liquidity Coverage Ratio, Liquidity Management, OTC derivatives, Repo, Securities Lending, Shadow Banking

Euromoney just published an interview with IMF Economist Manmohan Singh. A link is here. Singh has written extensively on securities financing, collateral chains, shadow banking, and re-hypothecation — all things…

Nine takeaways from the Clearstream Global Securities Financing conference regulatory panel

January 18, 2012

CCP, Collateral Management, Liquidity Management, Regulatory, Repo, Securities Lending

Europe, Financial Stability Board, Regulations, Repo, Securities Lending

Clearstream is holding its 16th annual global securities financing conference in Luxembourg these days with over 800 attendees. Today’s regulatory panel was very interesting, especially the views of regulators that…

Where is all that corporate cash going? Why, to repo of course.

January 9, 2012

Liquidity Management, Repo, Tri-Party Repo

Europe, Liquidity Management, Repo, Shadow Banking, tri-party repo

If you were wondering where all that corporate cash is going, according to a January 9, 2012 article in Reuters by Douwe Miedema (a link is here) it is going into…

Now everyone is a repo trader

As our first post of the year, it is appropriate to come back to one of our common threads: collateral. The WSJ article from Dec. 29, 2011 “Europe’s Banks Face…

The Fed gets down to the nuts of bolts of monitoring repo and seclending

December 23, 2011

Liquidity Management, Regulatory, Repo, Securities Lending

Fed, Repo, Securities Lending

In a new Staff Report, the Federal Reserve gets serious about evaluating what kind of data are necessary to sufficiently oversee the repo and securities lending markets. While the majority…

Has MF Global Revealed a Fatal Flaw in CCP Margin Procedures? An Analysis of MF Global’s Margin Failure

December 20, 2011

CCP, Collateral Management, Liquidity Management, Regulatory, Repo

Additional Margin, collateral management, Euro Sovereign Debt, LCH.Clearnet, Liquidity, MF Global, Regulations, Repo

A closer analysis of the reasons for MF Global’s failure reveals that subtle decisions at the heart of how repo contracts are cleared in Europe may have contributed to the…

Basel III LCR rules may change, allowing corporates and equities. Nestle debt looks a whole lot better than Portugal.

December 7, 2011

Liquidity Management, Regulatory, Systemic Risk, Wrong Way Risk

Basel III, Credit Markets, Europe, LCR, Liquidity Coverage Ratio

The irony of sovereign debt being used for Basel III Liquidity Coverage Ratios (LCR) yet becoming more risky by the hour from a credit perspective is coming home to roost.…

Repo in 2012: high quality paper scarce, risker paper increasingly harder to fund

December 6, 2011

CCP, Collateral Management, Liquidity Management, Regulatory, Repo

CCP, collateral conversion, collateral management, collateral transformation, ECB, Europe, Repo

Three recent posts on FT Alphaville all point in a similar direction. If you connect the dots on these cautionary tales, 2012 is going to be a difficult year in securities…

LIBOR dispersion: watch out for French banks

December 2, 2011

Liquidity Management, Systemic Risk

LIBOR, risk

For fans of the data that underly widely quoted statistics and assumptions, the new Bank of England Financial Stability Report provides a trove of worthwhile information. One of the more…

Central Bank actions on FX Swaps will bolster securities financing markets

November 30, 2011

Liquidity Management, Repo, Securities Lending, Systemic Risk, Tri-Party Repo

Bank of Canada, Bank of England, Bank of Japan, European Central Bank, Federal Reserve, Finadium, FX Swaps, Repo, Securities Lending, Swiss National Bank, tri-party repo

Today’s news of coordinated action by the major central banks to reduce the cost of FX swaps by 50bp and extending the program’s authorization until February, 2013 certainly captured the market’s…

How was MF Global able to leverage themselves so much? The answer lies in the repo market.

November 3, 2011

Collateral Management, Liquidity Management, Regulatory, Repo

Europe, Leverage, MF Global, Repo

One wonders exactly how MF Global was able to leverage themselves so much. Their June financials showed $44.4 billion of assets vs. $1.4 billion of equity, a ratio of just…

Derivsource: Collateral Transformation, Silver Bullet or Smoke and Mirrors?

October 27, 2011

CCP, collateral conversion, collateral enhancement, collateral management, collateral transformation, Collateral upgrade, Repo, Securities Lending, Securities Lending Operations, tri-party repo

CCP, Collateral Management, Liquidity Management, OTC Derivatives Clearing, Regulatory, Repo, Securities Lending

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We think there are some great points brought up in this piece. The Custodians, through their FCMs or DCOs, are all interested in facilitating collateral conversion trades for their clients,…

FRB-NY Money and Payments Workshop Examines Repo Market Reform

October 18, 2011

Liquidity Management, Regulatory, Repo, Tri-Party Repo

collateral management, Credit Markets, Federal Reserve, Lehman, Money Markets, Repo, tri-party repo, Wholesale Funding

I am sure these papers will make for interesting reading. Finadium’s July 2011 research report The New Face of the Repo Market for Investors, Dealers, and Clearers took an in…

UK regulators scrutinizing collateral upgrade trades

October 18, 2011

CCP, Collateral Management, Liquidity Management, OTC Derivatives Clearing, Regulatory

Basel III, CCP, collateral conversion, collateral enhancement, collateral management, collateral transformation, Collateral upgrade, LCR

There have been a handful of articles in recent days about UK regulators scrutinizing collateral upgrade trades. One issue the FSA seems to be concerned about is the ability of…

Institutional investors tapping repo for liquidity

October 17, 2011

Liquidity Management, Repo, Securities Lending

Finadium, Institutional Investors, Liquidity Management, Repo, Securities Lending

An article in P&I today falls into the “what we always knew but still nice to see in the mainstream press” department. Institutional investors are engaging in repo and securities…

Short-Term Debt, Rollover Risk, and Financial Crises

October 12, 2011

Liquidity Management, Repo

Bear Stearns, Credit Markets, Federal Reserve, Federal Reserve Bank of New York, Liquidity Freeze, Liquidity Management, Money Markets, Repo